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Compass Point upgrades Flagstar Bancorp, downgrades Hilltop Holdings

Upgrade

* Chris Gamaitoni of Compass Point upgraded Troy, Mich.-based Flagstar Bancorp Inc.'s stock rating to "buy" from "neutral" and raised the price target to $41 from $40.

In addition to the upgrade, Compass Point transferred coverage of Flagstar Bancorp to Gamaitoni from Jesus Bueno.

Gamaitoni wrote that Flagstar Bancorp's stock "continued strong loan growth in the core bank should support near-term earnings."

Gamaitoni reduced Flagstar Bancorp's 2018 EPS estimate to $3.09 from $3.11, and he increased the company's 2019 EPS estimate to $3.64 from $3.43.

Downgrade

* Gamaitoni downgraded Dallas-based Hilltop Holdings Inc.'s stock rating to "neutral" from "buy" and reduced the price target to $25 from $32.

Compass Point also transferred coverage of Hilltop Holdings to Gamaitoni from Bueno.

Gamaitoni is of the view that "competitive pressures in the mortgage origination market are likely to continue to weigh" on Hilltop Holdings' stock.

Gamaitoni lowered Hilltop Holdings' EPS estimates to $1.74 from $2.21 for 2018, and to $2.13 from $2.46 for 2019. The primary reason of lowered estimates, according to Gamaitoni, is a more conservative outlook on Hilltop Holdings' mortgage revenue, which is partially offset by lower expenses and provision, as well as higher net interest income.